LIFE INSURANCE Corporation's (LIC) plans to float a bank has hit a hurdle after the insurance regulator IRDA refused it permission to use policyholders' funds for setting up a subsidiary. The LIC Act allows the corporation to have a paid up capital of only Rs 5 crore. Surplus funds have to be mandatorily distributed among policyholders and the government. There are only two ways that LIC can float its banking arm. One, the government gives LIC additional funds to set up a bank; and two, after the LIC Act is amended, the corporation ploughs back its surplus funds and floats a banking arm from its net worth. But there is also a third option. LIC could indirectly own a bank if RBI permits LIC HF to promote a bank.

GOING LIVE SOON

THE fourth national-level exchange that's awaiting Sebi's nod to launch currency futures trading is expected to be given the regulatory nod for going live shortly, said a person familiar with the process. There were talks that the approval has been late in coming as the regulator was not comfortable with Jaypee, a Delhi-based broker, holding a sizeable stake in the bourse. The exchange also has to have a minimum of 50 brokers enrolled as its members whereas it has around 40 and some documentation regarding brokers is pending. But, the person said that all relevant information associated with the approval procedure had been submitted to the regulator, and getting the approval was only "a matter of time."

SECOND THOUGHT

A HOST of realty developers were planning to hit the market and get themselves listed. This would have paved the way for further fund raising in future. However, uncertain market conditions is making them think twice. According to sources, Mumbai-based real estate developer Lodha has postponed its initial public offering for now.

THE Power Finance Corporation (PFC) recently raised Rs 550 crore from the bond market. While the issue itself is a modestly sized one, what makes it exceptional is that it had as many as 18 banks acting as managers to the issue - an indication of how the bond markets have tightened. PFC had set a target of raising Rs 21,000 crore during the current fiscal. So far, its has raised over Rs 16,000 crore. The corporation also plans to raise another $300 million through an external commercial borrowing in the coming weeks.

LONG MEMORY

SOME of the foreign banks in India still seem to be feeling the ripple effects of the subprime crisis. One of the larger European banks have been in the market for the past several months to hire people in treasury and corporate banking. However, the bank seems to be finding it difficult to attract talent even from the subprime crisis hit Western banks. The reason: during the height of financial crisis, many banks had cut back on their Indian operations. Seems bankers have a long memory too.

GOOD OLD DAYS

A DO organised by the head-hunting firm Transearch on Monday saw a large number of bankers from HSBC in attendance, leading us to speculate if they're all in the market for new jobs. As it turned out, they were mostly there on account of Anjali Forbes, the Mumbai head of Transearch and the head of its financial services practice. Formerly with ANZ Grinday Bank, Ms Forbes obviously works hard at keeping her network going strong. Not surprisingly, the buzz over cocktails was the re-entry of ANZ Bank to India. When it does, ANZ's top management will surely be drawn from the ex-Grindlays talent pool, who remain nostalgic about their good old days in the bank.

Source: The Economic Times